Investment: Charter Members in Space

Four minutes after the new stock went on sale last week at $20 a share, its price jumped to $27. Brokers throughout the U.S. were swamped with calls for it, and buyers even lined up in Paris. The chief underwriter—Merrill Lynch, Pierce, Fenner & Smith—set up a bank of 32 Teletypes in Manhattan to take orders. In Washington, one sobbing woman asked whether she could sue a broker who claimed that he had no shares; in Houston, demand was ten times greater than the supply. Why the commotion? The federally sponsored

Communications Satellite Corp. had come on the market, and investors were eager to buy a place in space.

Few seemed to care that Comsat's officers had put red warning flags all over the issue. Chairman Leo D. Welch and President Joseph Charyk cautioned that Comsat was a chancy venture that would not loft a satellite for another year or a profit for at least three. But buyers were motivated by a sense of patriotism, a desire to become charter members in an exciting enterprise, and the solid conviction that any company backed by the Government and by American Telephone & Telegraph Co. was ultimately bound to succeed. Said one Manhattan investor: "I'm buying this stock for my grandchildren."

On top of the 5,000,000 shares that it sold a fortnight ago to A.T. & T. and other communications companies, Comsat last week disposed of another 5,000,000 shares to more than 500,000 individual investors—the biggest initial distribution in history. A few customers managed to get 50 shares, but most had to be content with ten or fewer. An IBM computer system printed and registered the entire issue, saving 25,000 man-hours of work. Sales were over the counter, with regular trading on the New York, Midwest and Pacific Coast stock exchanges expected to begin in July. The market held fairly firm—Comsat closed the week at $21.62—and the company was drawing attention in some surprising places. Next week Chairman Welch will fly to Geneva to negotiate with Russian officials, who are interested in tying up with Comsat in some way.